Once a year the Australian magazine BRW publishes its list of Australia’s richest people and as you examine the list you’ll see every year the rich are getting richer.
So, what can we learn from Australia’s wealthy individuals?
Property remains the single biggest source of wealth.
This should come as no surprise – looking back over the years no matter how the economy changes, the Rich 200 has always been dominated by the property entrepreneurs. And it’s much the same all over the world.
Remember, there’s nothing wrong with seeing what other successful people do and applying those principles to your own life. If so many extraordinarily wealthy people have used real estate profitably, it stands to reason that there’s money to be made in this sector.
The other lessons I learned by reading the various entrepreneurs’ stories are:
While last year 17 percent inherited some of their fortune, most on the Rich List were self made successes, some coming from working class backgrounds.
Attending a private school and an elite education is clearly not a prerequisite to joining Australia’s wealthy. While some forged important networks at school, many went to public schools and others didn’t even finish high school. In fact less than half have tertiary qualifications.
3. Invest counter cyclically.
Remember Warren Buffet’s famous quote: “Be fearful when others are greedy, and be greedy when others are fearful.”
4. Make your millions and then reinvest it – don’t spend it.
This is really just using the power of compounding to grow your asset base before you start spending up big.
5. Take risks early on, but not once you are established.
While many entrepreneurs took big risks to get their enterprises going, successful investors then preserved their wealth by cautiously investing rather than taking further risks.
6. Have one good idea and repeat it.
One core trait that successful entrepreneurs share is the ability to take a good idea and repeat it over and over again. Look through the list and you’ll see so many entrepreneurs stick to the same concept for years and just expand in different locations.
This is different to picking fads, which are transient.
8. Go for growth.
Sure, cash flow is important but to become really rich you need a large asset base. While the average investor tries to increase their cash flow, the wealthy are obsessed with building their asset base. Much the same as those on the BRW Rich 200 list who concentrate on building their balance sheets even more than they do on their profit and loss accounts.
9. Surround yourself with a good team.
As I’ve often said – if you are the smartest person in your team you are in trouble.
10. Take action.
All the people who made it onto this year’s BRW Rich 200 list started with a dream and then took action.
11. You’re never too young and you’re never too old.
The youngest member of the BRW Rich 200 last year was aged 35 and had a greater estimated wealth than the oldest member who was 92.
What lesson can you learn from Australia’s richest people? What can you differently to become a successful investor and get ahead of the pack?